Individual - Treasury Securities & Programs Individual Treasury Securities & Programs NOTE: Weï¿½re introducing a new retirement savings account, the myRA . U.S. Treasury securities are a great way to invest and save for the future. Here, you'll find overviews regarding U.S. Treasury bonds, notes, bills, TIPS, and Floating Rate Notes (FRNs), as well as U.S. Savings Bonds. Treasury Securities Here's what's available: Treasury Bills Treasury bills are short-term government securities with maturities ranging from a few days to 52 weeks. Bills are sold at a discount from their face value. Treasury Notes Treasury notes are government securities that are issued with maturities of 2, 3, 5, 7, and 10 years and pay interest every six months. Treasury Bonds Treasury bonds pay interest every six months and mature in 30 years. Treasury Inflation-Protected Securities (TIPS) TIPS are marketable securities whose principal is adjusted by changes in the Consumer Price Index. TIPS pay interest every six months and are issued with maturities of 5, 10, and 30 years.

Floating Rate Notes (FRNs) Interest payments on an FRN rise and fall based on discount rates for 13-week Treasury bills. FRNs are issued for a term of 2 years and pay interest quarterly. I Savings Bonds are a low-risk savings product that earn interest while protecting you from inflation. Sold at face value. Check out our table that is a comparison of TIPS and Series I Savings Bonds . EE and E Savings Bonds EE and E Savings Bonds are a secure savings product that pay interest based on current market rates for up to 30 years. Electronic EE Savings Bonds are sold at face value in TreasuryDirect. Treasury Securities Programs If you are interested in electronic payroll savings, or are looking to find out more about auctions, you can also find the necessary details here: Types of Government Bonds - Bills, Notes, Bonds By Thomas Kenny Updated August 09, 2016 Investors who pay attention to the financial media will often hear three different terms as it relates to government bonds: Treasury bills, Treasury notes, and Treasury bonds. The securities are similar in that all are issued by the United States to fund its debt, and all are backed by the full faith and credit of the U.S. government.

There are two key differences between the three types of U.S. Treasuries, however: their maturity dates and the way that they pay interest. How Treasury Securities Work First, let’s look at the difference in the maturities of the three types of Treasury securities. Treasury bills (or “T-bills”) are short-term bonds that mature within one year or less from their time of issuance. T-bills are sold with maturities of four, 13, 26, and 52 weeks, which are more commonly referred to as the one-, three-, six-, and 12-month T-bills, respectively. The one-, three-, and six-month bills are auctioned once a week, while the 52-week bills are auctioned every four weeks. Since the maturities on Treasury bills are so short, they typically offer lower yields than those available on Treasury notes or bonds. Treasury notes are issues with maturities of one, three, five, seven, and 10 years, while Treasury bonds (also called “long bonds”) offer maturities of 20 and 30 years. In this case, the only difference between notes and bonds is the length until maturity.

The 10-year is the most widely followed of all maturities; it is used as both the benchmark for the Treasury market and the basis for banks’ calculation of mortgage rates. Typically, the more distant the maturity date of the issue, the higher the yield. How the Three Types of Securities Pay Interest The other key difference is the way Treasury bills pay interest. Like a zero-coupon bond , T-bills are sold at a discount to par. This discount is determined at the auction. “Par” is $100, or the value at which all T-bills mature. For instance, an investor could pay $98 for a bill that will eventually mature at $100. The $2 difference between the auction price and the maturity price represents the interest on the T-bill. The New York Federal Reserve Bank’s website provides a brief explanation of how to calculate the effective yield of a T-bill based on its price and time until maturity. In contrast, both Treasury notes and bonds pay a traditional “ coupon ,” or interest payment, every six months. When these securities are auctioned, they may sell at a price that translates to a yield to maturity higher, or lower, than that of the coupon.

TreasuryDirect , the website offered by the U.S. Treasury to enable investors to buy government bonds directly, explains how this process works . What Kind of Price Fluctuations Can You Expect? Once T-notes and T-bonds are issued, their prices fluctuate so their yields remain linked to market prices. For example, say the government issues a 30-year bond with a yield of 10% when interest rates are high. In the next 15 years, prevailing rates fall significantly and new long bonds are being issued at 5%. Investors will no longer be able to buy the older T-bond and still receive a yield of 10%; instead, its yield to maturity will fall and its price will rise. In general, the longer tthe time there is until the bond matures, the greater price fluctuation it will experience. In contrast, T-bills experience very little in the way of price fluctuation since they mature in such a short amount of time. In short, there are only a few differences between the various types of Treasury securities. Still, these are important differences that it pays to understand for those considering an investment in government bonds.

Treasury Bond - T-Bond Definition | Investopedia Government Security BREAKING DOWN 'Treasury Bond - T-Bond' Treasury bonds are one of four types of debt issued by the U.S. Department of the Treasury to finance the government’s spending activities. The four types of debt are Treasury bills, Treasury notes, Treasury bonds and Treasury Inflation-Protected Securities (TIPS). The securities vary by maturity and coupon payments. All of them are considered benchmarks to their comparable fixed-income categories since they are virtually risk-free, backed by the U.S. government, which can raise taxes and increase revenue to ensure full payments. These investments are also considered benchmarks in their respective fixed-income categories as they offer a base risk-free rate of investment with the categories' lowest return. Maturity Ranges Treasury bonds are issued with maturities that can range from 10 to 30 years. They are issued with a minimum denomination of $1,000, and coupon payments on the bonds are paid semi-annually. The bonds are initially sold through auction in which the maximum purchase amount is $5 million if the bid is noncompetitive or 35% of the offering if the bid is competitive.

A competitive bid states the rate the bidder is willing to accept; it is accepted depending on how it compares to the set rate of the bond. A noncompetitive bid ensures the bidder gets the bond but he has to accept the set rate. After the auction, the bonds can be sold in the secondary market . There is an active secondary market for Treasury bonds, making the investments highly liquid. The secondary market also makes the price of Treasury bonds fluctuate considerably on the trading market. As such, current auction and yield rates of Treasury bonds dictate their pricing levels on the secondary market. Similar to other types of bonds, Treasury bonds on the secondary market see prices go down when auction rates increase, as the value of the bond’s future cash flows is discounted at the higher rate. Inversely, when prices increase, auction rate yields decrease. In the fixed-income market, Treasury bond yields help to form the yield curve, which includes the full range of investments offered by the U.S. government. The yield curve diagrams yields by maturity and is most often upward sloping, with lower maturities offering lower rates than longer-dated maturities.

However, when longer maturities are in high demand, the yield curve can be inverted, which shows longer maturities with rates lower than shorter-term maturities. RELATED TERMS US Treasury Bonds - Fidelity Go U.S. Treasury Bonds Treasuries are debt obligations issued and backed by the full faith and credit of the U.S. government. Because they are considered to have low credit or default risk, they generally offer lower yields relative to other bonds. Newly issued Treasuries can be purchased at auctions held by the government, while previously issued bonds can be purchased on the secondary market. Both types of orders can be placed through Fidelity.* Treasury 4-, 13-, 26-, and 52-week Interest and principal paid at maturity U.S. Treasury notes 2-, 3-, 5-, 7-, and 10-year Interest paid semi-annually, principal at maturity U.S. Treasury bonds Interest paid semi-annually, principal at maturity Treasury inflation-protected securities (TIPS) Coupon 5-, 10-, and 30-year Interest paid semi-annually, principal redeemed at the greater of their inflation-adjusted principal amount or the original principal amount U.S.

Treasury zero-coupon bonds Interest and principal paid at maturity Treasury STRIPS 6 months to 30 years Interest and principal paid at maturity * As of November 1, 2012 Structure: Coupon or no coupon/discount Investors in Treasury notes (which have shorter-term maturities, from 1 to 10 years) and Treasury bonds (which have maturities of up to 30 years) receive interest payments, known as coupons, on their investment. The coupon rate is fixed at the time of issuance and is paid every six months. Other Treasury securities, such as Treasury bills (which have maturities of one year or less) or zero-coupon bonds, do not pay a regular coupon. Instead, they are sold at a discount to their face (or par) value; investors receive the full face value at maturity. These securities are known as Original Issue Discount (OID) bonds, since the difference between the discounted price at issuance and the face value at maturity represents the total interest paid in one lump sum. Features & Benefits Credit quality Treasury securities are considered to be of high credit quality and are backed by the full faith and credit of the U.S. government.

That backing carries weight due to the federal government's taxing power and the relative size and strength of the U.S. economy. However, in August 2011 the long-term sovereign credit rating on the United States of America was downgraded to AA+ from AAA by the Standard & Poor’s ratings agency, reflecting increasing concerns about the U.S. budget deficit and its future trajectory. Tax advantages Interest income from Treasury bonds is exempt from state and local income taxes, but is subject to federal income taxes. Other components of your return, however, may be taxable when the bonds are sold or mature. If you buy a bond for less than face value on the secondary market (known as a market discount) and you either hold it until maturity or sell it at a profit, that gain will be subject to federal and state taxes. Buying a bond at market discount is different than buying a bond at Original Issue Discount (OID) . When a bond is sold or matures, gains resulting from purchasing a bond at market discount are treated as capital gains while OID gains are treated as a type of income.

Liquidity Large volumes of Treasuries are bought and sold throughout the day by a wide range of institutions, foreign governments, and individual investors so they are considered to be highly liquid. Investors considering Treasury securities have opportunities to buy bonds both at regularly scheduled auctions (see Auction Schedule) and in the secondary market, which is one of the world's most actively traded markets. Investors can find Treasury bills, notes, and bonds posted with active bids and offers . Spreads (the difference in price between the bid and offer) are among the most narrow available in the bond market. Investors should, however, be aware that at certain times, such as when important economic data is released, Treasury securities can be at their most volatile. Choice Treasuries come in maturities of 4 weeks to 30 years, with longer maturities usually offering higher coupons. Treasuries also come in various structures, like Treasuries with coupons, zero-coupon Treasuries, and Treasury inflation-protected securities (TIPS), whose principal and returns adjust to reflect changes in the consumer price index.

Treasury bill financial definition of Treasury bill Treasury bill financial definition of Treasury bill Related to Treasury bill: commercial paper Treasury Bill A debt security backed by the full faith and credit of the United States government with a maturity of one year or less. Very commonly, T bills have a maturity of a few weeks to a few months. They are purchased at a discount and then redeemed for par ; T bills do not pay interest . For example, an investor may purchase a $5,000 bill for $4,500. While he/she will not earn any coupon payments , he/she will receive $5,000 in no more than a year. They are low- risk , low- return investments . Private investors may purchase T bills in small quantities, but the bulk of the T bill market comes from institutional investors , especially banks . See also: Treasury note , Treasury bond . Treasury bill A short-term debt security of the U.S. government that is sold in minimum amounts of $10,000 and multiples of $5,000 above the minimum. Bills with 13-week and 26-week maturities are auctioned each Monday, and 52-week bills are sold every 4 weeks.

These obligations, which are very easy to resell, may be purchased through brokers, commercial banks, or directly from the Federal Reserve. Also called T bill. See also bank-discount basis , certificate of indebtedness , Form PD 4633-1 . Treasury bill (T-bill). Treasury bills are the shortest-term government debt securities. They are issued with a maturity date of 4, 13, or 26 weeks. The 13- and 26-week bills are sold weekly by competitive auction to institutional investors, and to noncompetitive bidders through Treasury Direct for the same price paid by the competitive bidders. Treasury bill a redeemable FINANCIAL SECURITY bearing a three-month redemption date which is issued by the Bank of England. Some Treasury bills are purchased on tap at undisclosed sums by government departments with temporary cash surpluses, but the vast majority are sold at periodic tender auctions to DISCOUNT HOUSES and overseas banks. Treasury bills bear a nominal face value which is repaid in full on redemption, but the price paid for them on issue depends on the outcome of a competitive tender, with discount houses and overseas banks bidding against each other for an allocation.

The Treasury bills which are bought by the discount houses are usually then sold (rediscounted) in the DISCOUNT MARKET to other buyers, principally to COMMERCIAL BANKS which hold them as part of their ‘liquidity base’ to support their lending operations. Treasury bills are issued alongside BONDS both to raise finance for the government to cover BUDGET deficits and also as a means of controlling the MONEY SUPPLY and level of INTEREST RATES . See MONETARY POLICY . Treasury bill a FINANCIAL SECURITY issued by a country's CENTRAL BANK as a means for the government to borrow money for short periods of time. In the UK, three-month Treasury bills are issued by the BANK OF ENGLAND through the DISCOUNT MARKET . Most Treasury bills are purchased initially by the DISCOUNT HOUSES and then, in the main, sold (rediscounted) principally to the COMMERCIAL BANKS , which hold them as part of their liquidity base to support their lending operations. Treasury bills constitute a significant part of the commercial banks’ RESERVE ASSET RATIO . Thus, the monetary authorities use Treasury bills to regulate the liquidity base of the banking system in order to control the MONEY SUPPLY .

For example, if the authorities wish to expand the money supply, they can issue more Treasury bills, which increases the liquidity base of the banking system and induces a multiple expansion of bank deposits. See also BANK-DEPOSIT CREATION , FUNDING , REPO RATE OF INTEREST , MONETARY POLICY COMMITTEE , PUBLIC-SECTOR BORROWING REQUIREMENT . How Often Do Treasury Bonds Pay Interest? | Bankrate.com How often do Treasury bonds pay interest? By Dr. Don Taylor, Ph.D., CFA, CFP â¢ Bankrate.com Dear Dr. Don, If I buy a 30-year U.S. Treasury bond, will I receive a monthly check for the interest earnings? Share this story -- Peter Pecuniary Dear Peter, U.S. Treasury securities that pay what's called "coupon interest" make those payments semiannually. A 30-year U.S. Treasury bond falls into that category. The most recently issued 30-year bond has a 2.75 percent coupon. The coupon rate determines the interest payments. The 2.75 percent is the annual coupon.

The bond will pay $27.50 per year for every $1,000 in face value that you own. The semiannual coupon payments are half that, or $13.75 per $1,000. If you have a TreasuryDirect.gov account and use it to buy and hold U.S. Treasury securities, the coupon interest payments will be made directly into your bank account. If you own these securities in a brokerage account, the coupon interest payments are made into your brokerage account. The U.S. Treasury does not issue checks for interest payments. U.S. Treasury marketable securities -- Treasury bills, Treasury notes and Treasury bonds -- have minimum denominations of $100. If you're buying in $100 denominations, you should plan to hold the investments to maturity, because selling them is both a hassle and expensive. Treasury bills don't pay coupon interest, but Treasury bonds and notes do. Treasury bills are sold at a discount to face value, and the investor receives the face value when the T-bill matures. Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter . Ask the adviser To ask a question of Dr.

Don, go to the " Ask the Experts " page and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice. Bankrate's content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate's Terms of Use . advertisement Individual - Treasury Bonds: Rates & Terms Individual Treasury Bonds: Rates & Terms Treasury bonds are issued in a term of 30 years and are offered in multiples of $100. Price and Interest The price and interest rate of a bond are determined at auction. The price may be greater than, less than, or equal to the bond's par amount (or face value). (See rates in recent auctions .) The price of a fixed rate security depends on its yield to maturity and the interest rate.

If the yield to maturity (YTM) is greater than the interest rate, the price will be less than par value; if the YTM is equal to the interest rate, the price will be equal to par; if the YTM is less than the interest rate, the price will be greater than par. Here are some hypothetical examples of these conditions: Condition Below par price required to equate to 4.35% yield Premium (price above par) 104.511963 Above par price required to equate to 3.99% yield Sometimes when you buy a bond, you are charged accrued interest, which is the interest the security earned in the current semiannual interest period before you took possession of the security. If you are charged accrued interest, we pay it back to you as part of your next semiannual interest payment. For example, you buy a 30-Year Treasury bond issued February 15, 2006 and maturing February 15, 2036. If February 15, 2006 fell on a Saturday, Treasury would issue the bond on the next business day, Monday February 17, 2006.

Besides the purchase price, you would pay Treasury for the interest accrued from February 15 to February 17, 2006. When you get the first semiannual interest payment, it will include the accrued interest you paid. If you are a TreasuryDirect customer, you should look at your Current Holdings, Pending Transactions Detail after 5 pm Eastern Time on auction day and check the price per $100 and accrued interest to determine the total price of the security. Next, make sure the source of funds you selected has sufficient funds to cover the total price. If you need to add funds to cover the purchase price, you have to do so before the issue date of the security. If you buy from a bank or broker, please consult the bank or broker to learn payment arrangements. Bonds pay interest every six months. Options at Maturity ï¿½ and Before You can hold a bond until it matures or sell it before it matures. If you don't sell, your options at maturity depend on where you hold your bond: TreasuryDirect. Redeem the bond or use its proceeds to reinvest into another bond of the same term. Legacy Treasury Direct. Redeem the bond.

(Bonds cannot be reinvested in Legacy Treasury Direct, which is being phased out .) Bank or Broker. For your options, consult your bank or broker. Auction Pattern Original Issuesï¿½February, May, August, November *Reopeningsï¿½January, March, April, June, July, September, October, December * In a reopening, we sell an additional amount of a previously issued security. The reopened security has the same maturity date and interest rate as the original security. However, as compared to the original security, the reopened security has a different issue date and usually a different purchase price. Paper Bonds or Electronic Bonds Bureau of the Fiscal Service P.O. Box 426 Treasury Bonds | How To Buy Treasury Bonds | TradeKing Degree of sentiment on the stock market: -3 to +1 Strongly bearish to mildly bullish Bonds can be run at any time as a key component of a diversified investment portfolio. Broader Market Outlook Although it is possible to make sound investments in virtually any market environment, it’s usually a good idea to evaluate the Fed’s current and anticipated policy on interest rates before and while holding bond investments.

If your bond’s coupon rate is higher than the current interest rate target set by the Fed, your bond is going to look pretty sweet to investors, driving its price up. But if the Fed were to bump up interest rates to a rate higher than your bond’s coupon, your bond won’t look so hot compared to new bonds issued with the higher coupon rate. Your bond’s price would correspondingly drop in the secondary market. Other concerns are market jitters or inflation. When there’s great uncertainty in the stock market, there’s a “flight to quality” among investors. Treasuries are usually the preferred vehicle in this case. Treasury Inflation-Protected Securities (TIPS) might be just the ticket if you fear inflation is on the rise. About the Security Bonds are investments known as “debt securities” or “fixed-income securities”. For the retail investor, bonds are bought and sold through a broker, like TradeKing, who charges a commission and may also charge a markup or markdown when acting as principal. Each bond you own represents a loan you have made to the issuer. You can think of this as an IOU. In exchange for the loan, you’ll be paid a specified rate of interest over time.

In general, the goal when investing in bonds is to receive a competitive coupon (interest payment) as scheduled and to receive full repayment of your loan at maturity. Neither goal is without risk. A change in interest rates can have a huge impact on a bond’s price. Interest rates and bond prices are like a seesaw: when one goes up, the other moves down. If you decide to sell a bond investment prior to maturity, it’s possible you may incur a capital loss. The Quick Start Guides for Bond Basics and Bond Investments cover many important topics when getting started with bonds. Before investing carefully consider your investment objectives, the risks, transaction costs and fees. The Strategy Treasury bonds – also known as “Treasuries” or “T-Bonds” is the umbrella term for different types of bonds issued by the U.S. Treasury. Treasuries come in three main types based on the time frame of the loan: T-Bills  the shortest-term variety maturing in one year or less T-Notes  mid-range loans with maturities of two, three, five and ten years T-Bonds  the longest-term loans maturing in 30 years.

Treasuries are widely regarded as virtually risk-free investments – but in exchange for that safety, you’ll have to be willing to accept a correspondingly modest return. T-Notes and T-Bonds pay a rate of interest every six months, or twice per year until the bond matures. T-Bills operate a bit differently. They’re issued in the primary market at a discount to their face value of $1,000 per bill. Instead of earning a rate of interest, you’d get $1,000 when the bill matures. Another form of Treasuries are Treasury Inflation-Protected Securities or TIPS. TIPS are market securities whose principal is tied to changes in the Consumer Price Index, or CPI. TIPS principal increases with inflation (rises in the CPI) and decreases with deflation (decline in the CPI). TIPS pay a fixed rate of interest twice annually, and that interest also fluctuates with current inflation levels. Think of it this way: if inflation does kick in as you’d feared, your TIPS principal would increase accordingly. Then you’d be paid a fixed rate of interest on a higher principal, effectively resulting in a higher rate of interest.

You can buy TIPS in five-, ten- or twenty-year maturities in increments of $100 each. Upon maturity you get either the inflation-adjusted principal or the original principal. Treasuries are virtually risk-free Treasuries can be considered the Cadillac of secure loans. The Treasury has never defaulted on a federal loan, and its debt securities are considered virtually risk-free - as safe as cash. (However, the Treasury’s credit-worthiness won’t prevent losses if selling your bonds prior to maturity.) In fact, Treasuries are considered so bulletproof that risks associated with debt securities the world over use Treasuries as the prime benchmark of safety. Ultimate safety comes with tradeoffs, however. Treasuries pay the lowest rate of interest of all bond types in exchange for being an extremely sure thing. Like other Treasury bonds, TIPS are theoretically default risk-free. However, you do face significant risks in the event that deflation occurs. Deflation, or a drop in the CPI, means your principal would be correspondingly adjusted downward, so your interest payments would be less than if the CPI had stayed flat or showed evidence of inflation.

In a deflationary environment, then, TIPS products could expose you to significant capital losses. At maturity, though, a useful safeguard kicks in: if the adjusted principal is less than the security's original principal, you’d be paid the original principal. However, no such safeguard exists against deflation before maturity. You might opt for Treasuries because: Bonds are a part of your asset allocation plan. You’ve decided to invest a certain percentage of your portfolio in bonds. Your top priority is capital preservation, with minimal risk. If you can’t stomach any risk, Treasuries offer the lowest-risk investment going. You want a highly liquid market for your bond investments. If you need to cash out of your Treasuries, chances are high you’ll find an investor willing to take the security off your hands at a competitive and acceptable price. Treasuries can be used in a common bond strategy known as laddering. This involves spreading your risk over a series of different maturities, while maintaining an average maturity that suits your investment goal’s time horizon. Time Horizon Treasuries are used across all time frames, from the extreme short-term to the extreme long-term.

Your time horizon may vary according to your investment objectives, asset allocation, risk tolerance and available capital. Try to choose a bond with a maturity date that coincides with when you expect to need the money. Some investors gradually shift from higher-risk investments like stocks or other bonds to Treasuries as the time horizon for a given financial goal approaches. When to Get In You might buy Treasuries if: You want to transition assets into a low risk investment as your time horizon for reaching a financial goal approaches. You are super-nervous about the stock market. You don’t have a clear outlook on the market as a whole. You expect interest rates to decrease in the future. You expect inflation to rise and invest in TIPS. When to Get Out Treasuries are usually purchased with the intention of holding them until maturity. That said, you might liquidate your holdings in Treasuries if: You need the money for a specific purpose. You are comfortable with the risk-reward relationship offered by the stock market. You have a clearer outlook on the stock market. You expect interest rates to increase. You expect inflation to stabilize or deflation to occur and liquidate TIPS. The bond reaches its maturity date.

Investment Management Treasuries are usually purchased with the intention of holding them to maturity, which makes for a low-maintenance investment. The interest payments you receive while holding T-Notes or T-Bonds deserve more attention. Each individual coupon payment may not seem like much money. However, stashing these payments in a savings account over the course of a year can amount to a nice chunk of change. Consider reinvesting these funds to purchase additional bonds on an annual basis. Volatility Factor Fluctuation in bond prices is a factor of changes in interest rates and changes in Credit quality . If you hold your bonds until maturity, the volatility they experience between now and then doesn’t change the fact that you will receive the full face value at that time. In general, prices of Treasury securities tend to fluctuate the least when compared to other bonds due to their very high credit-worthiness (and therefore their low risk). Increased time-to-maturity, higher coupons, longer duration, and bonds trading at a discount are all additional factors which can increase the volatility of bond prices. Be sure to choose a bond investment that is inline with your risk tolerance.

TradeKing Margin Requirements Obviously it’s important to estimate in advance how much margin interest cost you expect to incur on every margin trade, because you’ll need the interest you receive from your bond to outperform these costs. Margin rates vary from account to account. The greater the amount you borrow, in general, the lower your rate will be. You can view the lower rates as a volume discount. If you understand the risks, you can buy Treasuries on margin as long as you have a margin account which meets the minimum equity requirement of $2,000. Not all bonds may be purchased on margin. For Treasuries the initial and maintenance margin requirements are usually 10% of the current market value. These requirements could increase due to market volatility, fluctuations in the bond’s value, concentrated positions, trading illiquid bonds and other factors. If the equity in your account is not sufficient to meet these requirements, you will be required to increase your cash or marginable security holdings to ensure you have sufficient collateral to repay the loan. When this happens, it’s known as a “margin call,” and TradeKing will instruct you to adjust your holdings over the life of the investment.

Tax Ramifications Investments in Treasuries are taxable at the federal level, but exempt from state and local taxes. Consult your tax advisor for the low-down on this important topic. TradeKing Tip Use the Rule of 100 or Rule of 120 with your asset allocation plan. Tools Trailing Stop Order This handy order type lets you “trail” your stop order for a stock, option or ETF you hold by a method you specify. Lock in potential profits and limit losses automatically. Trader Feed Keep tabs on your favorite TradeKing traders: what they’re trading, talking about, and more. Options Pricing Calculator Research an option contract's Greeks and implied volatility. Forecast theoretical values and compare them to current bid/ask prices. And change variables to reflect your market forecast — all in an... More tools... Related Strategies Long Leveraged ETF A leveraged ETF’s price is designed to move in multiples of two, three or more times the price movement of its target index. The target index may be broad-based, like the S... Long Call A long call gives you the right to buy the underlying stock at strike price A. Calls may be used as an alternative to buying stock outright. You can profit if the stock rises, without taking on all...

Buy Value Mutual Fund Value mutual funds seek out stocks that the fund management considers undervalued by the marketplace – good bargains at current prices. Typically, this involves using fundamental analysis to examine... More strategies... Options involve risk and are not suitable for all investors. For more information, please review the Characteristics and Risks of Standard Options brochure available at before you begin trading options. Options investors may lose the entire amount of their investment in a relatively short period of time. Online trading has inherent risks due to system response and access times that vary due to market conditions, system performance and other factors. An investor should understand these and additional risks before trading. $4.95 for online equity and option trades, add 65 cents per option contract. TradeKing charges an additional $0.35 per contract on certain index products where the exchange charges fees. See our FAQ for details. TradeKing adds $0.01 per share on the entire order for stocks priced less than $2.00. See our Commissions and Fees page for commissions on broker-assisted trades, low-priced stocks, option spreads, and other securities. Quotes are delayed at least 15 minutes, unless otherwise indicated. Market data powered and implemented by SunGard .

Company fundamental data provided by Factset . Earnings estimates provided by Zacks . Mutual fund and ETF data provided by Lipper and Dow Jones & Company . * Commission-free buy to close offer does not apply to multi-leg trades. Multiple-leg options strategies involve additional risks and multiple commissions , and may result in complex tax treatments. Please consult your tax adviser. Implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or the probability of reaching a specific price point. The Greeks represent the consensus of the marketplace as to how the option will react to changes in certain variables associated with the pricing of an option contract. There is no guarantee that the forecasts of implied volatility or the Greeks will be correct. Investors should consider the investment objectives, risks, charges and expenses of mutual funds or exchange-traded funds (ETFs) carefully before investing. The prospectus of a mutual fund or ETF contains this and other information, and can be obtained by emailing [email protected] . Investment returns will fluctuate and are subject to market volatility, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost. ETFs are subject to risks similar to those of stocks.

Some specialized exchange-traded funds can be subject to additional market risks. TradeKing's Fixed Income platform is provided by Knight BondPoint, Inc. All bids (offers) submitted on the Knight BondPoint platform are limit orders and if executed will only be executed against offers (bids) on the Knight BondPoint platform. Knight BondPoint does not route orders to any other venue for the purpose of order handling and execution. The information is obtained from sources believed to be reliable; however, its accuracy or completeness is not guaranteed. Information and products are provided on a best-efforts agency basis only. Please read the full Fixed Income Terms and Conditions . Fixed-income investments are subject to various risks including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results and are not guarantees of future results.

Any third-party content including Blogs, Trade Notes, Forum Posts, and comments does not reflect the views of TradeKing and may not have been reviewed by TradeKing. All-Stars are third parties, do not represent TradeKing, and may maintain an independent business relationship with TradeKing. Testimonials may not be representative of the experience of other clients and are not indicative of future performance or success. No consideration was paid for any testimonials displayed. Supporting documentation for any claims (including any claims made on behalf of options programs or options expertise), comparison, recommendations, statistics, or other technical data, will be supplied upon request. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. TradeKing provides self-directed investors with discount brokerage services, and does not make recommendations or offer investment, financial, legal or tax advice. You alone are responsible for evaluating the merits and risks associated with the use of TradeKing's systems, services or products. For a full list of disclosures related to online content, please go to . Foreign exchange trading (Forex) is offered to self-directed investors through TradeKing Forex.

TradeKing Forex, Inc and TradeKing Securities, LLC are separate, but affiliated companies. Forex accounts are not protected by the Securities Investor Protection Corp. (SIPC). Forex trading involves significant risk of loss and is not suitable for all investors. Increasing leverage increases risk. Before deciding to trade forex, you should carefully consider your financial objectives, level of investing experience, and ability to take financial risk. Any opinions, news, research, analyses, prices or other information contained does not constitute investment advice. Read the full disclosure. Please note that spot gold and silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. TradeKing Forex, Inc acts as an introducing broker to GAIN Capital Group, LLC ("GAIN Capital"). Your forex account is held and maintained at GAIN Capital who serves as the clearing agent and counterparty to your trades. GAIN Capital is registered with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA) (ID # 0339826). TradeKing Forex, Inc. is a member of the National Futures Association (ID # 0408077). © 2017 TradeKing Group, Inc.

All rights reserved. TradeKing Group, Inc. is a wholly owned subsidiary of Ally Financial, Inc. Securities offered through TradeKing Securities, LLC, member FINRA and SIPC . Forex offered through TradeKing Forex, LLC, member NFA . Treasury Auctions - FEDERAL RESERVE BANK of NEW YORK The Community Credit interactive highlights credit conditions, including measures of credit inclusion and stress, at the national, state and county levels. Treasury Auctions The U.S. Government currently auctions several Treasury securities to finance the public debt including bills, notes, bonds, Treasury Inflation Protected Securities (TIPS), and Floating Rate Notes (FRNs). The Treasury Department auctions securities on a regular and predictable basis. These securities are bought by primary government securities dealers, investment funds, foreign accounts, individual investors, and other investor classifications. Bids are submitted through Treasury Direct or through the Treasury Automated Auction Processing System (TAAPS). Investors without access to TAAPS can bid through broker-dealers or depository institutions with access to TAAPS. The U.S. Treasury Department regularly borrows to finance the Federal Government's debt.

The public debt of the United States doubled from $8.68 trillion in 2006 to $17.35 trillion in 2013. Approximately two-thirds of that debt is held in Treasury bills, notes, and bonds or "treasuries." The Treasury Department sells these securities at auctions via TAAPS (Treasury Automated Auction Processing System). The rest of the debt is held mostly in other nonmarketable debt securities, such as U.S. Savings Bonds, and is not sold through the auction process. Primary dealers—banks and broker-dealers that trade in U.S. Treasuries with the New York Fed—are the largest group of buyers at auction. These financial institutions are active in buying and selling U.S. government securities. Other auction participants include investment funds, pensions and retirement funds, insurance companies, foreign accounts, non-profit organizations, and others. Only the designated primary dealers are required to bid a specified amount in every Treasury auction. A much smaller volume of securities is purchased by individual investors who buy them directly from the Treasury Department through TreasuryDirect. Investors who purchase securities directly from the Treasury avoid the commission and brokerage fees that may be associated with purchases through an auction submitter or through the secondary market.

An Investment with Diverse Maturities Treasury auctions began in 1929 with the sale of 3-Month Treasury bills, the shortest-term government security. At the time, longer-term securities—government notes and bonds—were sold only through underwriters, a practice that continued until the 1970s. Between 1973 and 1976, the auction process gradually replaced all other means of issuing notes and bonds. Currently, the Treasury auctions a variety of securities including bills, notes, bonds, TIPS, and FRNs. Bills mature in one year or less and are currently offered in 4-, 13-, 26-, and 52-week maturities. Treasury bills (T-bills) do not pay interest prior to maturity and instead are sold at a discount to the par value. Cash management bills (CMBs) are occasionally offered in order to meet short-term financial needs. CMB maturities are set on an issue-by-issue basis and typically run from 1-day to approximately 1-year (most are issued with terms of less than three months). CMBs are awarded almost exclusively to primary dealers.

Notes mature in two to ten years and are currently offered in 2-, 3-, 5-, 7-, and 10-year maturities. Treasury notes (T-notes) make a coupon payment every six months. Bonds have the longest maturity of more than ten years and are currently offered in only a 30-year maturity. Treasury bonds (T-bonds), like notes, make a coupon payment every six months. Treasury inflation-protected securities (TIPS) were introduced by the U.S. Treasury in 1997 and are currently offered in 5-, 10- and 30-year maturities. The principal amount of a TIPS security is adjusted to the Consumer Price Index (CPI), a commonly used measure for inflation. Therefore, the coupon payments of a TIPS security increases when inflation increases and decreases when inflation decreases. Treasury TIPS also make a coupon payment every six months. Floating rate notes (FRNs) were introduced in 2014 and are currently offered in only a 2-year maturity. The FRN pays a quarterly coupon that is indexed to the rate of the most recent 13-week bill offering.

Therefore, the coupon payments of a FRN may increase when interest rates increase and decrease when interest rates decrease. A Public Announcement The modern auction process for treasury securities begins with a public announcement by the Treasury. The announcements are generally released several days before an auction; however Treasury can announce an auction on the same day and has done so in the past (typically only for CMB auctions). An auction announcement will contain the following information: Amount of the security Treasury is selling Auction date Original issuance date (in the case of a reopening) Maturity date Terms and conditions of the offering Customers eligible to participate Noncompetitive and competitive bidding close times Additional pertinent information Once an auction is announced, bids for the security can be submitted through TreasuryDirect or through TAAPS. Recent announcements can be found on the TreasuryDirect.gov website. The Bidding Begins Bids are accepted immediately after the announcement of a security and are submitted electronically through the Treasury Automated Auction Processing System (TAAPS). All bids are confidential and can be submitted in two types: Non-competitive and competitive. Non-competitive bids are generally submitted by small investors and individuals. All non-competitive bidders are guaranteed to receive securities.

The amount of securities that may be sold to a single non-competitive bidder is limited to $5 million per auction. Foreign and International Monetary Authorities (FIMA) as well as the Federal Reserve’s System Open Market Account (SOMA) can also participate noncompetitively, however, there are separate rules regarding their participation. Non-competitive bidding typically closes at 11:00am for bills and FRNs and 12:00pm for notes, bonds, and TIPS on the day of the auction (Eastern Time). Competitive bids are usually submitted by large financial institutions for their own accounts or on behalf of customers. Bids are submitted in terms of a discount rate for bills and a yield for coupon-bearing securities, stated in three decimal places. To ensure that the secondary market for Treasury securities remains competitive, bidders are restricted to receiving no more than 35 percent of the total amount of securities available to the public. Many of the securities bought by large dealers will later be sold and resold on the secondary market to companies, banks, other dealers, and individuals. Given their large bid sizes, primary dealers submit their competitive bids at the last possible moment, sometimes literally seconds before the auction closes.

Competitive bidding typically closes at 11:30am for bills and FRNs and 1:00pm for notes, bonds, and TIPS on the day of the auction (Eastern Time). All submitted bids are consolidated in TAAPS where they are reviewed and processed to assure compliance under the Treasury's Uniform Offering Circular (UOC). Determining the Winning Bids Once the auction is completed, TAAPS will process all the bids received and determine the auctions’ winning price. It does this first by subtracting the non-competitive bids from the public offering amount to determine the amount of securities available to the competitive bidders. For example, in an $11 billion auction, if $1 billion in non-competitive bids is received then $10 billion in securities will be awarded to competitive bidders. Total Public Offering Amount Series 7-Debt Securities: Corporate and U.S Government Loans Flashcards issued in successive years but have only one maturity date issuers pay interest only on the bonds they've issued so far construction companies that are in phases of construction would issue this type of bond Term Serial Bonds Definition a portion of the oustanding bonds mature at regular intervals (for example, 10% of the entire issue matures yearly).

Usually issued by corporations and munis to fund projects that provide regular income streams a serial bond that has more bonds maturing on the final maturity date is called a balloon issue Term Secured Bonds Definition are backed by collateral, involve a pledge from the issuer that a specific asset (for instance, property) will be sold to pay off the oustanding debt in the event of default have a lower yield than unseccured bonds are considered a safer investment (think conservative investor) Term 4 Types of Secured Bonds Definition the amount the investore receives if the bond is called prior to maturity Term Definition if the CY, YTM, or YTV is > than the NY the bond price will drop and vice sersa Term Accrued Interest Definition the additional cost that invstors pay when they purchase bonds in the market on top of the market price it is due when bonds are purchase between coupon dates, is the portion of the interest still due to the seller if an investor hold onto a bond for five months out of a six month period, he or she is entitled to 5/6 of that next interest payment; thats accrued interest Term Remember!

Definition Accrued interest on corporate and municipal bonds is calculated on a 360-day year and assumes 30-day months Accrued interest on U.S government bonds is calculated using the actual days per year and actual days per year Accrued interest is calculated from the previous coupon date up to, but not including, the settlement date Term the 31 day months are January, March, May, July, August, October, December The rest are 30 day, except for febuary which is 28 Term Callable Bonds Definition A bond that the issuer has the right to buy back from investors at the price stated on the indenture riskier for investors because investors dont know how long they can hold onto the bond issued with a higher coupon rate most are issued with call protection which is the amount of time that an issuer had to wait before calling the bond some also have a call premium which is the amount over par value that an issuer has to pay if calling its bond in the early years Term Put Bonds Definition allow the investor to "put" the bonds back (redeem them) to the issuer at any time at the price stated on the indenture these bonds are rarely used Term interest received on U.S government securities is exempt from state and

 local taxes the interest received on municipal bonds is exempt from federal taxes When you see a question on the exam about the best investment for a future event (college), the answer will most likely be either zero-coupon bonds or T-STRIPS Term Definition debt securities backed by pools of mortgages dont have a set maturity date and are subject to things called extension risk and prepayment risk they are broken down into tranches (slices) of varying maturity dates Term Prepayment Risk Definition the risk that a tranche will be called sooner than expected due to decreasing interest ratesl more people refinance when interest rates are low Term Extension Risk Definition the risk that a tranche will be called later than expected dude to a less than normal amount of refinancing occurs when interest rates are high Term Tranche Definition all have regular interest payments, but only the tranche with the shortest maturity receives principle payments after the shortest tranche is retired, the second-shortest receives principle payments until that tranche is retiredm and then the principle is paid to the next tranche Term Planned Amortization Class (PAC) Tranches Definition the most common because it has the most certain prepayment date the prepayment and extension risk can be somewhat negated by a companion tranche, which assumes a greater degree

 of risk Term Targeted Ammortization Class (TAC) Tranches Definition second safest CMO TACs protect investors from a rise in the prepayment rate or a fall in interest rates.

They do not protect from a fall in the prepayment rate like PACs. Term Companion Tranche Definition A class of tranche found in planned amortization class (PAC) and targeted amortization class (TAC) collateralized mortgage obligations (CMOs) that absorbs variable prepayment rates. The companion trache is so named because it is designed to provide support to the main PAC tranche, which has priority in receiving principal and interest payments so as to give its investors steadier and more predictable cash flows. If the actual rate of prepayments differs from the assumptions made at the time the CMO was issued, the difference is absorbed by the companion tranche. Term american dollars held by a foreign bank outside the U.S this situation is usually the result of payments made to overseas companies Term Bankers Acceptances Definition a time-draft (short-term credit investment) created by a company whose payment is guaranteed by a bank used for importing and exporting goods Term EE bond Definition A non-marketable, interest-bearing U.S. government savings bond that is guaranteed to at least double in value over the initial term of the bond, typically 20 years.

Most Series EE bonds have a total interest-paying life that extends beyond the original maturity date, up to 30 years from issuance. Term HH bond Definition A 20-year non-marketable U.S. government savings bond that pays semi-annual interest based on a coupon rate. This coupon is locked in at a fixed rate for the first 10 years, after which it is reset by the U.S. Treasury for the rest of the bond's life. Interest on Series HH bonds is exempt from state and local - but not federal - taxes. Term Arbitrage Definition The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time. Supporting users have an ad free experience!

Question: Of the 4 types of Treasury Securities issued, Treasury Bills, Treasury Notes, Treasury Bonds, and Treasury Inflation Protected Securities, which one has the shortest maturation date of only a year?
Answer: Treasury Bills